A person’s credit report rating is complied of many different aspects of their credit file. To understand the credit report rating one must first understand the credit file, what it contains and what it does not. The credit file does not contain any bankruptcies that are over 10 years old or any negative remarks that are over 7 years old. Neither of these will therefore affect your credit report rating and they should be removed from the credit file after the appropriate time has passed. 

This is an overview of what your credit file contains and how it affects your credit report rating. Beginning with personal information, the credit file is covers almost every aspect of ones life. Any names, including name changes and maiden names, will be accompanied on the file report along with the residency current address. In some cases ones telephone number may also appear, as well as the entire social security number. These things do not necessarily affect the credit report rating but give useful background information that may be used to influence a lender’s decision.

The credit report rating is greatly affected by the judgments, bankruptcies, and collection agencies listed in the file, if any exist. Also having an adverse affect on your credit report rating are any late payments and credit cards that have reached, or exceeded, their agreed credit limits. Lastly recent enquiries, or loans you have applied for and been denied, will affect the score on ones credit file which in turn affects the overall credit report rating.

One factor that is commonly misunderstood by consumers is the income to debt ratio. This factor will indirectly deteriorate the credit report rating. The amount of gross income ones earns in comparison to the amount of debts one owes defines the income to debt ratio. Lenders will usually consider this when approving or denying a loan, which in turn will affect the credit report rating. The general consensus is that if a more than a set percentage of the income exceeds the amount of debt, then in general terms, one simply can not afford to owe another creditor.

In short, a credit report rating is far more valuable than most people realize it is. Your financial future will either thrive or suffer in relation to your credit report rating and it is up to owner of the credit report rating to repair the damage improve it wherever possible. You need to understand your credit report file and what it says about the person, correct any mistakes, and know your overall credit report rating.